Tales and Opinion from the Front End of Credit Broking

Tag Archives: mortgages

Last week, I was invited to present to a network of IFAs, and a very constructive experience it was.

For a long time in my career in second charges it has felt like second mortgage packagers have been looked on as junior partners at best. Now, I am by no means the most neurotic individual within the packager landscape, however it would be fair to say that even I have perceived a tangible derision from IFAs to second mortgages, moreover, second mortgage packagers.

I’d never really understood it until a conversation with the principle of the network I visited!

A conversation that went something like this (when I say “something like this” I mean to say “exactly like this”):

Me: “So I won’t ask which second charge packagers you use as that would be lazy to play myself off against them, however I would ask, individually, how many second mortgages do you introduce per year?”

Principle: “I don’t do them, well, I didn’t do them, MMR has changed that which is why you are here”

(at this point it might be worth saying that I don’t know what my face is doing 100% of the time, I think it might have looked something like this:

only less Chinese)

Me: “Why not?”

Principle: “Because *** phone me every couple of days pestering me for business, I am so sick and tired of them, I have even told them to f*** off and it doesn’t work, it has put me right off secured loans because *** keep banging on about being market leading, so if the market leaders are this much of a pain in the arse it doesn’t look great.”

Me: “Oh…well we are very different to ***, let me prove it”

Happily since that conversation, the network has sent me half a dozen leads, but it did get me thinking.

How many other independent advisors, mortgage brokers, networks are getting the wrong impression of what we do based on output from companies with greater market presence and all the bright marketing, but less expertise/professionalism?

That may well come across as me being conceited, but it seems that light travels faster than sound that’s why some people appear bright until you hear them speak, is an unfortunate and depressing truism in our industry.

To top it off, a couple of days after this meeting, we had an email from *** asking for our referrals, here it is:

Hello,

To Further our call a little time ago, I am sending you this email to point out the pro’s and con’s of using ***.

As I mad you aware on the telephone we specialize in bridging and commercial finance.

Why should you use us? Well, we are one of the best on the market at placing business.

We also have all of these reasons:

No exit penalties available.

13 years experience

Over 100 close relation lenders.

Loans available in England, Wales & Scotland.

Minimum loan of £25k

No Maximum

Working to 65-70% ltv.

Dedicated broker managers.

To Give you a basic information of what I am offering,

If you were to pass me a case, I would undertake all work associated with the case in hand.

All that I would ask of you is to keep your client informed of exactly what stage we are at, and inform them of all details I would pass on to yourself. The reason I ask this is due to the fact that I understand that you have a fantastic relationship with each and every one of your clients and I would not want that to change in any way shape or form.

Personally I like to be fast an efficient in all the work I do. So from the second you pass me a case I will be attentive and try my very best to get you terms in the same day.

A massive incentive for you passing me a case is cash. And that is exactly what I am offering.

A bridging loan should be completed in 14 days, if not then it’s not a bridge.

On the 14th day ( day of completion ) I would simply hand you 50% of the commission. On average I pay £1000 to £1500 for any bridging case passed to me.

Not a bad little wage to earn of me doing work on your case!

I hope this educates you more on what exactly ***as a business offer.

I hope to hear from you soon.

Kind Regards

Aside from removing the trading name, this email is unchanged.

We have NEVER had a conversation with the company in question to introduce business to them, and the greeting is impersonal, but that doesn’t begin to explain how bad it is really does it?

If potential partners are considering introducing business to a third party, a secured loan/bridging packager in particular, to a product marketplace for which they have in the past held a dim view; is it fair to suggest that an email from “market leaders”, containing; misplaced capitals galore, hilarious miss-spelling “as I mad you aware” (this awareness must have been “mad” during the imaginary conversation we had), phantom apostrophes and a myriad of grammatical crimes, would put them off engaging?

let’s be honest, it reads like Arthur Daly trying to flog a second hand greyhound “A massive incentive for you passing me a case is cash. And that is exactly what I am offering.”… shudder

If anything, it gives the impression that the entry level for employees within our industry is very low indeed.

Rest easy finance professionals, second charge/bridging packagers aren’t all glorified chimps tea parties, it just so happens that the emptiest vessels making the most noise, are clouding your judgement.

No not Christmas… REGULATION, and the FCA’s naughty list is a far worse place to be than Santa’s little Black Book.

The soon to arrive FCA Regulation of the secured loan marketplace is long overdue and should be welcomed by enlightened stakeholders with open arms, yet to some the spectre of regulation is making the cracks all too apparent.

Personally I don’t see the big deal, my ethos is to show up to the office, call FCA regulated firms offering my services, provide an excellent, compliant service to their customers and my intermediaries alike, then pay them what I have promised to pay them.

Those that do not engage in the secured loan marketplace, don’t because they have made an educated decision based on the level of training they have endured and do so based on current regulatory frameworks. If an IFA deems a packagers product portfolio to be inferior to his mortgage offering, we can present the advantages of the secured loan, even question his wisdom at electing to mortgage a client, but surely, until we are regulated and qualified to the level of the IFA it is not our place to castigate them.

Regulation will not change that, regulation won’t change what I do one little bit, and regulation will not change what that IFA does either.

Yet in what appears to be a display of panic, some contemporaries seem to think that they can wag the dog, that they can preach to those who have known nothing other than regulation by the FSA/FCA, be derogatory about the very mouths that feed the industry.

Will a network embrace my service if I castigate it and its members? Unlikely

Will I change the minds of those who do not currently look to secured loans as an alternative by attacking them from my pulpit of ignorance? Unlikely

Over time, will those individuals engage with us because we demonstrate the ethics, service and knowledge that they demand? Absolutely

Regulation will change nothing in terms of business flows, those that use a preferred secured loan provider will continue to do so, those that don’t will need convincing that we aren’t all trying to teach them to suck lemons.

What regulation will change is the working practices of firms that are presently not compliant, it will uncover previously undisclosed bad practice, and it will extract rogue firms from the marketplace; perhaps that is reason enough for some to panic!

Probably an odd title to broach a subject on my mind. So how are mortgage market practices reflective of those within Victorian surgeons? I hear you ask.

In 1842 Sir Robert Liston, the most pre-eminent surgeon of the age was timed amputating the leg of a patient; the time recorded? A mere 30 seconds.

30 seconds, a blink of an eye within a lifetime, no time to think of alternative treatments, no time for the poor (and conscious) patient to back out and make a judgement call, and no consideration period where the poor patient may have come to the conclusion that waiting for 86 years for Penicillin to be unearthed, may be the preferable option.

How did he get so good? How did Sir Robert Liston become so very proficient at sawing off an adult leg in less than a minute? Well he used to do it all the time, it was his “go to” treatment.

“Got a bunion? … Amputation is the answer”

“What’s that a verrucca??? Ooooh nasty… yes I shall have to remove your leg at the hip”

“Sprained ankle sir…” You get my drift

It would be lax for me to suggest that Sir Robert was a bloodthirsty fiend carelessly hacking off limbs, when a sticky plaster and a “wait and see” approach would have sufficed.

I think it is a fair assumption that Sir Robert thought he was doing good for his patients, ridding them of toxic infections by totally removing the problem, and through habit, becoming the very best at hacking off limbs.

Fast forward to today, and let’s not pretend what we do is leg surgery, but all too often the habitual approach within the mortgage market is embraced without a thought for an alternative “stick plaster wait and see” option. I speak to dozens of brokers each week who pronounce “I have no need for secured loans, I am able to remortgage all of my customers”.

Whilst I don’t doubt the mortgage brokers’ proficiency at performing remortgages, and I don’t doubt that for those mortgage brokers who power through a remortgage in record time their heart is firmly in the right place, surely it is worth considering the alternatives?

“Why remortgage a client looking for a further advance who is on a rock bottom SVR on their principle mortgage? Why not top it up with a second charge before waiting for interest rates to rise and fix a remortgage on that event?”

If the answer is “I will always remortgage” perhaps, just PERHAPS there are some legs being hacked that merely need an elastoplast.